Higher base salaries, more paid time-offs, gym discounts, travel insurance — private equity is doing all it can to retain talent as the industry weathers a prolonged slump in deals.
With rising borrowing costs making fundraising and stake exits more challenging, buyout firms have become more selective in their hiring and are focusing more on keeping their existing staff happy, a Preqin report showed. The data provider surveyed 84 private capital firms globally for its findings.
While salaries were pumped up and down the ranks in 2023, those in junior and mid-level positions saw the biggest hike. Mid-level professionals got an average increase of about 10% year-on-year, the most among all other levels of seniority, according to Preqin’s 2024 Private Capital Compensation and Employment Review. Seniors saw about 9%.
Performance shares, which are usually reserved for upper management, are becoming increasingly popular, with almost half of the firms offering them this year, up from 24% in 2022. Cash-bonus payouts in 2023 could be muted compared with the past two years, the report said, adding fewer firms are expecting base salaries to rise more than 10% in 2024.
Global deal values are down about a third this year as economic uncertainty, geopolitical tensions and a series of interest-rate increases by central banks globally to combat inflation curtailed mergers and acquisitions.
Read more: M&A Fees Fade by $2.5 Billion on Wall Street: Bloomberg Deals
Aggregate capital raised in 2023 is still following a downward trend. Fundraising reached $900 billion for the year through September, and it’s likely to fall short of the $1.4 trillion raised in 2022, Preqin’s report said. Meanwhile, the number of funds closing dropped an annualized 48% from 4,471 in 2022 to 1,745 as of September 2023, it said.
In this environment, staff are being offered non-salary benefits such as student loan repayments, personal leave, car insurance assistance and more. Employee personal time-offs have increased by two days in the past two years, while vacations increased by a day for all levels except managers, who received two additional days in 2023.
--With assistance from Laura Benitez.
